Steinhoff has offered $1bn to investors in an effort to settle a legal battle stemming from the accounting scandal that nearly sank the South African conglomerate three years ago.
The company, whose stable of brands includes UK discount retailer Poundland and Mattress Firm in the US, said on Monday that the offer was designed to resolve almost all “complex legal claims” against it as the group tries to repair its finances.
Shares in Steinhoff, which are listed in Johannesburg and Frankfurt, have lost almost all their value since it first revealed the accounting irregularities, including evidence that former executives inflated profits and assets by more than $6bn for several years.
The scandal has left Steinhoff facing almost a hundred lawsuits seeking at least $8bn, including claims filed by Dutch and South African investors. Christo Wiese, the retail magnate who became Steinhoff’s largest shareholder and was formerly the richest South African, has the largest claim with about $3.5bn.
The proposed settlement “is the culmination of 12 months of intensive effort”, said Louis du Preez, Steinhoff’s chief executive.
“Although there is no certainty yet that we will be able to conclude this settlement, in our view these terms are firmly in the best interests of all stakeholders,” he said.
Steinhoff said the settlement was being offered in both cash and shares in Pepkor, its South African retail business. The company said the size of the offer reflected both its heavy debts and damage inflicted on its operations by the pandemic.
If the company had to pay the whole value of legal claims it faces, “it is clear that the net asset value of the group would fall far short of the amount required to satisfy them in full” and liquidation would ensue, Steinhoff said.
Steinhoff paid €160m in advisory fees in its latest financial year while recording a €1.8bn loss. It has more than €9bn of group debt. Lenders who agreed to restructure the debt last year would have to sign off on the legal settlement, the group said.
Steinhoff has been selling assets in order to raise cash and has looked at a listing or sale of Pepco, its European discount store group that includes Poundland.
This month it sold the French arm of Conforama, Europe’s second-biggest retail furnishings chain, for a nominal sum and attached properties for €70m in order to reduce its debts further.